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Central Pension Fund As Government Retreats Wal-Mart Dictates National Healthcare and Retirement Policies Three recent events on the national scene provide a depressing vision for the future of healthcare and retirement security in the United States. In December 2003 Congress rushed through, in the waning moments of its session, a Medicare reform bill which was little understood at the time both by the public as well as many members of Congress. After the bill’s passage it was revealed that, while for the first time providing a limited prescription drug benefit in the Medicare program, the bill specifically prohibited the federal government from using its market strength to negotiate drug prices with pharmaceutical companies. Rather, participants are left to find the best prices for their own prescriptions. This startling provision in the law was defended by its sponsors as necessary to avoid interference by the federal government in free-market competition. Of course, when viewed from the opposite perspective, this provision denies Medicare participants the protection of their collective market strength and places each individual at the mercy of the massive pharmaceutical industry, an industry which has imposed double-digit price increases for prescription drugs every year for the last several years. Such price increases will likely continue so long as the federal government refuses to assert its market power on behalf of the millions of citizens covered by Medicare. Related to the government’s retreat from confronting big business on prescription drug prices are two private-sector developments, which occurred in late 2003 and early 2004. The first was a strike by some 70,0000 grocery workers in Southern California, represented by the United Food and Commercial Workers (UFCW), employed by the Safeway, Kroger and Albertson’s grocery chains. That strike began in October 2003 and, at this writing, is continuing. The second was the announcement by Sears Roebuck & Company that, effective January 1, 2005, it will phase out its defined benefit pension plan. Sears is believed to be the largest U.S. employer to shut its defined benefit plan to new participants. Those two stories are directly related because the actions taken by Safeway, Kroger, Albertson’s and Sears are all in response to the Wal-Mart Corporation’s policies on healthcare and pension benefits. The strike issue for the grocery workers in Southern California was the proposal by Safeway, followed by Kroger and Albertson’s, to substantially cut back healthcare benefits to permit Safeway to compete against Wal-Mart. Wal-Mart, which has become the largest employer in the United States, has begun to sell groceries in its mega-stores. Wal-Mart has been able to drive its competitors out of business by not only selling products made in slave-labor conditions in foreign lands, but also by cutting the wages, benefits and working conditions of its U.S. employees to the bone. To employees at its U.S. stores, Wal-Mart makes available minimal healthcare benefits, which must be paid for almost entirely by the employees themselves. Safeway told its employees that they must begin cutting back to Wal-Mart’s level of healthcare benefits to keep their jobs. Likewise, Sears Roebuck in announcing the elimination of its defined benefit pension plan stated, “It’s part of the company’s strategy to provide benefits that our customers are willing to pay for, that our employees want, and we are in a competitive business. Our mission is to grow.” While Wal-Mart was not specifically identified, Wal-Mart has become the chief competitor for Sears, and almost all other U.S. retailers. The moral of these three stories is that if the federal government continues to refuse to assert its market power on behalf of U.S. citizens, national healthcare and retirement policies will be dictated by the likes of Wal-Mart. If that is permitted to happen then the wages, healthcare and retirement benefits established for the American public over the recent generations will rapidly disappear as corporations throughout the country eliminate those benefits in order to compete. Without legislative intervention, free-market competition will be waged entirely on the backs of working men and women. In a democracy, the role of government is to provide a force on behalf of working men and women to properly assure that free-market competition operates in a manner that supports those societal values that protect basic human dignity --- including the availability of healthcare and retirement benefits. Originally published in the International Operating
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